In fact, I often raise their prices to help them become profitable.

Before you read on, if you are one of the extreme couponers or use them religiously, this site, this blog and this post are not for you.

Untrained marketers who say we need to do something always go the easy let’s discount way. It takes very little imagination and since everybody else does it, they assume it must work.

As I’ve said in speeches around the country, anyone can be a discount whore; it takes no brains or skill.  And once you do it, you’re often condemned to repeating it as a lifestyle.

Here are 7 Reasons Coupons Shouldn’t Be Used For Your Marketing:

• Coupons are looked at as an ongoing effort. In effect, they become the whole marketing plan.
• By the time you factor in your time in creating them, printing them, distributing them and factoring in the actual discounting itself, you have a very expensive promotion.
• You have taught the customer that your product is not worth what you priced it at. In fact, you may have given the illusion you are raking in the big bucks on their backs.
• The people who found you through coupons will wait for your next one.
• You are rewarding people who have no relationship to the success of your business.
• Your sales staff will keep a copy of the coupon to offer to their own customers or friends.
• If your regular customers who have supported you find out someone who’s never been there is getting a better deal than they are, they just might not return.

That’s precisely what happened at a local restaurant in Long Beach, California where a group of us went for a birthday celebration. Located in an old craftsman house with antiques and a wood-burning fireplace, this was a great place to enjoy a great meal. We had ordered wine before dinner, enjoyed fabulous entrees and saved room for their signature desserts.

When the couple at the table next to us paid their check with a 50 percent off coupon, the owner must have been tipped off. He went to their table and sat down. We overheard him talk about his participation in the 50 percent off Entertainment Book.

He said that he valued the Entertainment Book because it brought in customers who had never tried him before. He told them the story of his business, how he and his wife built it and how many years he’d been there.

The coupon bearers told him they were from Pacoima, about an hour’s drive from the restaurant and that they would never have come without the coupon. He smiled, wished them well and said he looked forward to seeing them again.

Our table was incensed!

We lived in the neighborhood. We’d gone there for years, paid top dollar and received no special recognition. How did we feel? Who was more important? Here we had paid full price as usual and the people next to us who had no relationship paid half-price.

We never went back….

What to do instead

Reward those who buy from you 24/7 365 days a week. Those who shop with you regardless of the coupon, the “deal,” or the “steal.”  Getting them on your best customer list pays them back for their loyalty.

Getting the coupon users on your preferred list misses the point…

Now I’m not talking about giving people who don’t know you 50% off to come in the door with the online deal sites and then, as some have suggested, getting them on to your preferred customer list.

Why?

Because you just gave them 50% off, unless you are going to offer that regularly, they’ll feel your subsequent offers are not enough incentive and they’ll go elsewhere to someone else offering extreme coupons. Which means you took all the hit for giving them the deal with none of the promised rewards.

If you repeatedly market your business with coupons to people who don’t know you, you’d better cut your staff.  That’s because profit is what suffers.

And once your best customers find out others else get a better deal than the regulars they’ll be like me and never return. No one likes to feel they are being taken advantage of..

Two final thoughts on coupon marketing

1) The media are filled with how redemptions are way up on coupons and free-standing inserts like you find in the Sunday papers are at an all-time high.

Don’t be fooled. In the past two years coupon-hunting sites have proliferated, from mommy bloggers to individual business models that only exist to showcase the latest deals with tips and tricks.  Never has it been easier to find a coupon from anyone, anywhere.

2) Price isn’t everything – you have to make a profit. You can’t compete on price, you have to build your brand or you won’t be around for long.

If you’d like help meeting the challenges of 2012, especially in regards to your retail sales training or marketing efforts so you can be profitable please contact me.

Cheap people have been around forever.  You’ve had to deal with them before and so have I.  When I used to sell western wear in the 80′s I’d have guys ask me to “throw in the shoe trees and I’ll take ‘em.” No dice. I remember asking one guy, “So how do you buy groceries – say, ‘I’ll take the grapes if you throw in the Windex?’”  It usually got a laugh and a sale. Again, if you are a salesperson, you learn to read people and know how to be a chameleon with customers.

How did I develop thick skin to not discount? I saw the slippery slope I would be going down if haggling produced results.  The gal or guy gets their way. They tell their friends of the “great deal.” Their friends come looking for that deal. You have to remember what you did to repeat it.  Then the original person comes back and wants an even BIGGER deal for all the business they brought you.

The piece that I think so many businesses leave out is training their employees to not do it.  I don’t care that Seth Godin has said all employees should be “empowered to discount up to 10% to save a sale.” That’s not good management.

Your employees are hurting themselves and faced with debt. They identify with anyone looking for a deal. They already feel you are making boat loads of money off them. They don’t know how to sell to begin with so if someone will like them for giving them a “deal,” they’ll do it.  That can kill profits.

Here’s how to stop the haggling virus:

• Explain how much profit you make to your crew from every dollar showing rent, taxes, insurance, health benefits, advertising, the works; with most businesses it is about 3 – 5 cents out of each dollar paid.  Any less money is less to pay them.
• Train employees how to sell (see product at end of this article)
• Institute a “no haggling” policy. Just don’t do it.
• Give scripts for what to say you can do if asked that might include: “No, we don’t have a lower price on this item but you can sign-up on our e-club to get the best prices right here.” “We have a similar item over here.”  “You can put it on layaway.”

You must have scripts or well-meaning employees say things like, “I’m sorry I can’t do that,” which implies that someone else can. Or they say, “Only the manager can do that,” which implies the manager can.

As more stories continue to pop up by writers identifying with people looking for discounts you have to arm yourself to stop it, or face becoming one of those haggling helpless retailers grateful for any sale.

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How to grow sales in a down economy? The Retail Doc’s Five Parts to a Successful Sale is Phibbs proven sales techniques on two DVDs with workbook.  You’ll actually see Phibbs training a crew with the exact exercises needed to instill a sales process into your store.

I am so tired of the words “crisis”, “fear,” “downward spiral,” “worsening economic news,” etc., that I’ve become numb to whatever words follow. One word that gets used over and over again that really gets my goat, as if it were something fresh and newsworthy is the word “discount.”

Every dire prediction for holiday 2008 has to talk about retailers having to “discount.”

Extra! Discounts!

This is not news and hasn’t been news for a long time. Take a look below from the past five years:

From the Boston Globe, November 23, 2008, “Consumers will look for bargain-basement prices to help meet austere budgets, while retailers from Wal-Mart Stores Inc to Saks Inc learn if they have the right products at the right prices.

From the Chicago Tribune, October 29, 2007, “According to a new study by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, almost three-quarters (73%) of chief marketing officers at leading U.S. retailers believe discounting and promotions will be more plentiful this holiday season compared to 2006 due to the current credit crunch.

From CNN, December 11, 2007, “In some instances, consumers say they’re simply turned off by poor customer service or not enough discounting.

From Bloomberg, November 25, 2006, “Holiday discounts this year seem to be locked in a range between 20 to 60 percent.”

From the New York Times, November 28, 2005, “The disparity, analysts said, could indicate a tough season ahead for clothing retailers like Gap and Aéropostale and even deeper discounts for shoppers as the chains scramble to build momentum in the crucial approach to Christmas.

From The Associated Press December 2004, “Retailers are expected to increase discounting before Christmas after a late-buying binge failed to materialize during the weekend, fueling worries that industry profits could be hurt in the fourth quarter”

From CNNMoney, November 28, 2003, “ Despite signs of a pickup in the economy and an improving labor market, consumers don’t appear to be feeling the Yuletide cheer.  The Conference Board in a survey Monday said U.S. households on average are expected to spend $455 on gifts this year, down 5 percent from 2002.  “The 5 percent drop is shocking,” said Delos Smith, economist with the Conference Board, a New York-based business research group. “It indicates that perhaps the consumer tax rebate stimulus that benefited retailers during the back-to-school season has petered out.”  Analysts say it’s the discounters such as Wal-Mart and Target that are expected to ring in the bulk of holiday sales, while department stores will offer the most aggressive promotions.”

Does all of this sound too familiar?  It should – its an easy story to tell every year at this time of the year. That won’t stop any number of news sources from touting retailers “aggressive discounts needed to lure customers this holiday season” and how they aren’t working.  Look for those stories this Thursday, Friday, Saturday, Sunday and Monday. 

I’ll continue my thoughts on discounting in my next post about why people discount. Stay tuned!